Getting to the bottom of rising gas prices

The reasons for the disparity in gas prices have been listed as supply and demand, taxes and transportation

There are so many negative aspects to the recent letters to the editor that it is hard to pick out which one is the most important. I will try to comment on J. Tamblyn’s letter regarding the cost of gasoline at the pumps, as I have been associated with this at both ends.

The reasons given for the disparity has long been displayed as one or all three reasons: supply and demand, taxes and transportation.

Supply and demand: There is no shortage of fossil fuels in North America. There is enough known oil reserves in Canada alone to supply all of North America for over a hundred years, but there is a lack of refining and distribution.

The oil companies could easily double their production by using a portion of their profits, but would they want to? Artificial pricing by controlling production thereby creates a demand.

There is talk of pipelines in order to supply Asian and U.S. buyers, but there is little interest in a pipeline to Eastern Canada and Canadian refineries. Why?

Taxes: Taxes are a necessary evil, but the public will put up with this if the taxes are put to good use. The government, itself, has no money and relies heavily on your tax money to maintain and improve our highway system. Are the taxes generated by the sales of gasoline used to maintain our infrastructure or is it going in to general revenue?

Transportation: This is another area where the consumer is not given the facts. Most, if not all, transport of gasoline is now contracted out to different trucking companies, and they receive their contracts by bidding. These companies know what the expenses are to transport the goods and to receive a profit, but are all expenses the same?

If Joe Blow transports gasoline to one service station in a certain city, are his expenses the same as the supplier for another competing service station in the same city? If not, why are the prices at the pumps identical? This smells highly of collusion.

As I have stated, I have been associated with the oil and gas industry at both ends; as a member of a public inquiry into why prices are kept the same at the pumps regardless of the oil company in question, plus I was a research and development consultant for an oil field service company in Alberta.

Donald E Thorsteinson

 

Oliver